Stryker Offers To Settle DOJ OtisKnee Probe For $33 Million

Orthopedics maker, Stryker, is offering to settle a U.S. Justice Department (DOJ) probe for $33 million over its OtisKnee Implants.

The Justice Department has not evaluated the offer and MassDevice indicated that, in regulatory filings, Stryker stated that “there can be no assurance that we will reach a consensual resolution, when such a resolution would occur, or what the final terms of any such resolution may be.”

The first time Stryker made mention of the DOJ probe was in its 3rd-quarter 2010 earnings release, in which it stated that it had received a subpoena on “regulatory matters related to the OtisKnee device.” The device maker did not disclose any other information, said Mass Device, but did state that the subpoena “pertains to alleged issues prior to OtisMed acquisition,” wrote Piper Jaffray, an analyst, at the time.

Stryker now states that subpoena is “related to the sales and marketing of the OtisKnee device,” according to regulatory documents filed this week, said MassDevice.

“The subpoena concerns allegations of violations of federal laws related to sales of a device not cleared by the U.S. FDA,” the filing stated. “We recently entered into discussion with the DOJ regarding the potential settlement of this matter, and on May 31, 2012, we offered $33 million to the DOJ,” Stryker continued in the filing. “During the second quarter of 2012 we will record a non-tax deductible charge of $33 million representing our best estimate of the minimum of the range of probable loss to resolve this matter,” Stryker stated, according to MassDevice.

Meanwhile, the FDA has become involved in the growing metal-on-metal hip implant debacle and is conducting a safety review of metal-on-metal hip implants. Last May, the FDA directed 21 companies that market all-metal hip replacements to conduct post-market studies of their products to determine if the devices were shedding dangerous amounts of metallic debris in patients. Most recently, the FDA announced that its Orthopaedic and Rehabilitation Devices Panel will meet June 27-28 to discuss the risks and benefits of all-metal hip systems, as well as potential patient and practitioner recommendations for their use.

Most recently, a large study published in The Lancet revealed that there exists a 6.2% likelihood that patients with all-metal hips will require a replacement within five years We also wrote that, in New Zealand, Australia, and some parts of Europe people were notified about another metal-on-metal hip device recall. The recalled MITCH THR device, manufactured by DePuy Orthopaedics, has been identified as experiencing early failure rate, specifically within three years following implantation.

Several years ago, Stryker recalled its Trident hip implant days after the U.S. Food & Drug Administration (FDA) posted a warning letter on its website chastising Stryker for deficiencies at its New Jersey manufacturing plant. Stryker hip implant components involved in the recall were manufactured at the company’s manufacturing facility in Ireland, which was also the subject of a prior FDA warning letter.